tv Politics and Public Policy Today CSPAN September 21, 2016 3:00pm-5:01pm EDT
after being there for so many families and victims, she was going to be there. so she tried to work through it. clearly she said she should have been a little smarter and taken it a little easier. >> no, she found out about it on a friday, though, kept that through the press and it was revealed from the press and that was part of the issue about the revelation of it. >> she did what you and i do on friday, she continued working and she didn't notice a thing. >> to be fair, we are not running for president. >> that's even more the point. she's running for president. friday she's told you are kind of sick you should take it easy she goes i think i can go through it. saturday she continues to work and go through it. we don't know anything about her having pneumonia. sunday when she is out there for an hour and a half standing in the hot humid sun for 9/11 we find out. okay. so she tried to work through it. for two days she worked through it and you and i didn't know, a lot of folks didn't know that you were sicker than you professed, that you should have been home. yeah, she says my bad, i should have taken the advice early and
friday and maybe by sunday i'd be better -- well enough to be able to go out there. she found out, she had acknowledged within 24 hours, we knew she had pneumonia on that sunday and so, yeah. but think about this, we know more about hillary clinton than any person ever running for president. how much do you know about donald trump? how much did he pay in taxes last year? how much did he pay in taxes ten years ago? we know nothing about donald trump. how did his wife become a u.s. citizen? because she was an immigrant and i know folks have talked about immigrants. how did she gain her status to become a resident, legally in this country and then become a u.s. citizen? we don't know. donald trump said he and his wife were going to have a press conference to tell us. they never told us. how do we know how donald trump is going to defeat isis. he says he has a plan. it's a secret plan. is it going to remain secret all the way through until he tries to become president? we don't know anything about donald trump. we do know -- we're starting to know that with his so-called
nonprofit he has been using that nonprof nonprofit's money to do private for profit activities, like use a nonprofit -- the dallas from his trump foundation to pay for his bills from his lawsuit. >> that's in the papers today. >> that's in the papers today. he has used his nonprofit trump foundation to pay to buy for himself a portrait of himself. but we didn't know that because donald trump told us, we only no he that because somebody is doing digging and trying to figure out more about a guy who is as secret and unknown as you can find. i think we know that hillary clinton had pneumonia, we know a lot of details about that, we know a lot of details about a lot of things about hillary clinton, we know very little about donald trump. >> what is your confidence in her level -- and live on capitol hill now the rayburn house office building is the scene for this hearing for the cost of epipens that have gone up more than 500%
in recent years, they now cost about $600 if you buy a two pack. the company's ceo heather bresch, has arrived. she is sitting at the table. and is receiving most of the attention right there by all the journalists and camera people. she will be sitting before the house oversight committee this afternoon to answer questions about that price increase. this is live coverage on c-span 3. it should start in just a moment.
committee on oversight and government reform will come to order. without objection the chair is authorized to declare a recess at any time. we have an important hearing today reviewing the rising price of epipens. anaphylactic shock will kill about 1,500 people a year, roughly four people a day will die if they don't get the proper dosage of epinephrine. it's one of the ways that you can stop your child or your loved one from dying if they're going into this shock. this is a drug that -- a generic drug that's been around for about 100 years and it works. it's a good product. people, parents, they need this. it's not optional for somebody who has severe allergic reactions to a whole variety of things, but what we are here to
discuss today, and believe me, trying to drive into the depths of individual drug pricing is not -- was not something i set out to initially do, but it doesn't take very long to talk to parents or talk to people who are afraid that if this epipen is not within arm's reach when their young child suddenly needs it, you don't have to talk to somebody very long to figure out that they have to have this. it's not optional. and so here is the concern, here you have a drug that's been on the market for 100 years. costs roughly a dollar, the actual juice that's in here that you need costs about a dollar. but the price of this has gone
from roughly $99 for one to more than $600 for two in a very short amount of time. you literally see year over year where the price will jump $100 here and $100 there. it's a project that is not available on insurance plans, a lot of insurance plans, it's not mandated like some of the other things that obamacare have mandated. so suddenly you have people who can't afford what is a one year dose, right, there is an expiration date of a year. so they get two of them, some families i've talked to have ten of them because they need them in the car, the backpack, they have them all over. now we're talking about more than $600 to the consumer to have two of those. and so we've got a lot of questions. now, mylan as best i can tell
from afar looking at it done a lot of good in the world and they offer a lot of good products, but of the 635 products at the offer this generates about 10%, about 10% of their revenue. it's found in this one product. now, they are here to tell us that they make about $50 profit which i find a little hard to believe and that's why i think it's important that the ceo, and i appreciate her willingness to come in and talk to us, is telling us that, well, the middleman makes more than we do. we get less than half of that revenue actually goes to mylan. but here is what doesn't add up for a lot of people, and believe me, i'm a person who believes in profit, in profit motivation. you have five executives in five years that earned nearly $300 million in compensation and this
is by all accounts as best i can tell one of their biggest revenue drivers and one of the biggest revenue items. they used to have a competitor, that competitor dropped out of the market, i believe it was 2010, i could stand to be corrected but i believe it was 2010. when that other market -- other product left the market the product price zoomed, it just went up. so here is yet but another example of a lifesaving drug that you have to have, if you don't have it you're going to die and there's no competition which brings us to why we have mr. throckmorton here from the fda. one of my concerns based on the sole economics of it, right, basic economics, you have a generic product that's been on the market for 100 years and suddenly you see this massive rise in the cost, the price, to consumers. that would signal to entrepreneurs that there is an ability to make a profit. when you understand that the cost of goods for the juice is only $1, the delivery vehicle,
which is unique and it's innovative, there is a cost to that, too, but when the juice is a dollar and they are selling it for $600 there's some room for some profit, but if new market entrance aren't able to submit an application and get it through the fda then, guess what, you have in this case mylan who is able to market a product quickly rise -- raise the price, bring whom an exorbitant amount of profit with no competition. it was actually my brother who said, hey, why are you trying to get in the business of some private entity and how they price it. i said because the market forces our network. competition cannot be in there. competition would be good. it would help drive down the price. so we want to hear about the fda approvals. the last thing i would also mention here along the way, suddenly feeling the heat,
feeling the pressure, mylan has offered a generic version and cut the price in half. so that does beg the question what was happening with that other $300? i mean, driving the price down is great, but congress should be micromanaging that, but i do think this is worth exploring because we, again, saw one, a different drug earlier this year that we did a hearing and here we are again and my guess is if it's happening in these two instances it's probably happening in others. maybe not as egregious or as big of a rapid rise but i find this to be so extreme and we're talking about tens of millions of americans that have to have it. there's no competition, it's extremely expensive, it's not covered under insurance, there is not the competition, it is driving exorbitant profits and
that's why i think myself and mr. cummings are very jointly united in trying to address this, understand it better. we may have different solutions to it, but let's come back to my original premise. parents don't have a choice. if your child, your loved one has to have it this it better darn well be in that pack pack. it better be there. it better be at school. we want to try to offer some understanding and some relief to those parents and those people that go through that because every day four people a day are going to die because they don't have this product handy. i now recognize the gentleman from maryland, ranking member mr. cummings. >> mr. chairman, i thank you for holding today's hearing. as you know, this issue of the skyrocketing prices of prescription drugs has been one of my top priorities for several
years. this hearing is critical because yet another drug company, mylan, has jacked up the price of a lifesaving product for no discernible reason. and i did read your testimony, miss bresch, i was and not impressed. they raised the prices, the reason being, i believe, to get filthy rich at the expense of our constituents. at the expense of our constituents. may i hold your epipen? the epipen has been around for decades. it has -- it was introduced in 1988. the active ingredient has been around even longer and it costs just pennies to make, as the
chairman said. so what changed? what changed? what changed is that mylan acquired epipen in 2007. then they used a simple but corrupt business model that other drug companies have repeatedly used. we've seen it over and over and over again. find an old cheap drug that has virtually no competition and raise the price over and over and over again as high as you can. that's what martin shkreli did and that's what valiant's ceo did. they sat at this very witness table earlier this year with absolutely no remorse.
none. in mylan's case they had a virtual monopoly over the market and they decided to take advantage of it. as a result today a product that used to cost about $100 for two epipens now costs more than $600. to understand why mylan raised these prices so dramatically we need to understand how much money they are making off of this drug. according to documents obtained by the committee, epipens generated $184 million in net sales revenue in 2008. $184 million. in 2016, listen to this, in 2016 mylan expects this number to go up to more than $1.1 billion, as
in "b." that's more than a five fold increase over the ten years. what else changed since 2007? the epipen became mylan's first billion dollar drug. mylan has received more than $4 billion in net sales revenue on this one drug over the last decade and that's after rebates and discounts. my. my. my. the company also engaged in a massive marketing campaign. according to information obtained by the committee, mylan spent $100 million on advertising and marketing for epipens last year alone. then came the price increases. when mylan acquired epipen in 2007 the cost for two epipens
was about $100. in 2012 they raised the price to about $218. then they in 2014 they raised it again. do you see the pattern? they raised it again. to about $350. in 2015 they were on a roll, they raised it again to about $460. and now it's $608. while the price of epipens shot up exponentially so does miss bresch's paycheck. in the compensation of her fellow executives at mylan. in 2007 miss bresch received $2.45 million according to financial report. not bad. by last year her compensation
had soared to more than $18 million, a 671% increase. mylan's chairman, robert corey, got even more. he made more than $22.5 million in 2014 alone. after the public backlash to mylan's most recent price increase they announced at the would expand their patient assistance program. we've heard that one before. this is the same pr playbook other companies use when your price increases finally spark public outrage, just say you are expanding your patient assistance programs and make as much money as you can along the way. that's what martin shkreli did, that's what valiant did, and that's what mylan is doing.
here is the bottom line, i begged martin shkreli to use whatever influence he still had over his company to lower their prices. i pleaded with valiant executives to lower their prices. i called on mylan to reverse its drastic increases, but they all refuse. they talk about discounts and coupons and rebates, but even with withering bipartisan criticism from congress and desperate outcries from the american people, and, by the way, the american people that all of these folks up here represent, every single person up here has somebody that's affected by this. they never, ever, never lowered the prices. i'm concerned that this is a rope a dope strategy. today we will hold -- yet
another hearing, where the industry will take their punches, but then they go right ahead and keep on raising their prices. i'm sure somebody said to them, you know, look, you just go in there, the congress is going to be upset with you, but after which you are going to come out of there and we will just keep raising prices. we will keep doing it. after mylan takes our punches they will fly back to their mansions and private jets and laugh all the way to the bank while our constituents suffer, file for bankruptcy and watch their children get sicker or die. that's what we're dealing with today. yesterday someone asked me if i wanted the head of mylan to apologize today. i had to think about that for a minute. i think i would -- it would be more appropriate, it would be
nice, if she did, but that will not cause mylan to treat my constituents fairly and bring down the price to where it should be. we need solutions, i agree, mr. chairman, and i'm glad that this is a bipartisan effort. it's time for congress to act. we will hold today's hearing just like we held our previous hearings and to our witnesses when we had mr. shkreli before us, he said something that was very interesting and for some reason, mr. chairman, i think about it over and over and over again. as soon as he got out of the hearing do you know what he called us? i'm ba sills. he said every member of congress is an i'm ba siel. he knew that he would go back and do the same thing over and over again. so he took his punches. he rope-a-doped.
as a matter of fact, he did worse than that, he took the fifth. and the prices kept on going on up. and so i beg all of our colleagues to take this moment, this is our moment, if they're going to be something that they do in a bipartisan way this is it. as the chairman said and i watched the chairman in an interview yesterday and i could tell that he and i were getting a little bit emotional. do you know why? because we were thinking about children. we were thinking about children who may have some kind of spell and need this just to breathe. so i hope after the hearing is over that you just don't go back to the champagne, say, all right, we rope-a-doped it and now we're going to life as it was because our constituents deserve better and with that, mr. chairman, i yield back. >> thank the gentleman. we will hold the record open for five legislative days for any
members who wish to submit a written at the same time. we will recognize our panel of witnesses. we are pleased to welcome dr. douglas throckmorton director of the center for research at the food and drug add sfrags and miss heather bresch, crew chief executive officer of mylan. we welcome you box. pursuant to committee rules all witnesses are to be sworn before they testify. if you would please rise and raise your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth and nothing but the truth. thank you. you may be seated and let the record reflect that both witnesses answered in the affirmative. we would now like to recognize you each for five minutes. we will be liberal in the time if you want to go a bit longer than five minutes that's fine, but we want to make sure we maximize the time for members
asking questions. your entire written statement will be entered into the record. dr. throckmorton, you are now recognized for five minutes. >> thank you, chairman chaffetz, ranking member cummings -- >> bring that microphone way up close. bring it uncomfortably close. >> all right. chairman kra gets, ranking member cummings, members of the company i'm dr. douglas throckmorton deputy director for regulatory programs at the fda. thank you for this opportunity to appear before you today. to discuss fda's role in ensuring the safety, efficacy and availability of epinephrine auto injectors. as chairman chafe gets said epinephrine auto injectors are critically important and potentially lifesaving for patients who suffer from a severe allergic iraqis called anaphylax anaphylaxis.
when a patient requires this medication seconds count and it must work every time. to ensure this it is critical that the medication perform as designed. at the fda we are aware of the recent spikes in the price of epipen. in fact, i am personally aware of it as my son carrie is an epinephrine auto injector for his allergies. although fda does not have a regulatory role in the pricing of drug products we do play a critical role in ensuring that patients have access to beneficial medicines. we also recognize that when more than one version of a drug, especially a generic version, is approved, it can improve marketplace competition and help to provide additional options for consumers. with this role in mind fda is working hard to support the timely scientific and efficient development of new epinephrine auto injector products. epipen is not the only product
approved to treat anaphylaxis in an emergency. to date fda has approved four products to treat anaphylaxis, two of which are currently on the market. while doing what we can to support new epinephrine auto injector products the fda cannot approve a product for which we haven't received an application which is. we're doing all we can to support manufacturers as they work to develop new products include new epinephrine auto injector products and bring them to market faster. in 2013 the agency provided technical information to industry to design and test auto injectors. more recently this year we released draft guidance on how to determine whether these devices can be used effectively by patients. these efforts can help development by providing a clear roadmap to reduce uncertainty that can slow development. we also recognize the importance
of generic drugs in the united states and are working in this area to support their development. for example, as a part of our larger work to improve the review and development of generic drugs fda's office of generic drugs has a prioritization in expedited review policy that allows for certain products to get priority review, including products that are called, quote, first generics. to close, thank you for your interest in this important topic related to the safety, efficacy and availability of epinephrine auto injectors. fda takes our role, our public health mission seriously and is working hard to fulfill our role as it relates to this issue. one critical part of the mission is to ensure that the medical products on market are safe and effective and can be used as needed. in addition, as a part of our mission fda is also playing an important role in advancing public health by helping to speed innovation that promotes the wider availability of these
products. for complex medical products such as epinephrine auto injectors this means providing a roadmap to developers seeking to market new products and working with them whenever possible in support of new product development. these efforts coupled with the work of other groups with important roles to play will help assure access to these important medicines for patients. i'm happy to answer any questions that i can. >> thank you. miss bresch, you are now recognized. >> good afternoon, chairman chaffetz and ranking member cummings and members of the committee. i'm heather bresch, the ceo of mylan and i appreciate the chance to be with you today. before i answer your questions i would like to share with you a little information on my background and mylan and tell you what we have done in the last weeks to address the concerns about the price and the availability of epipens.
i grew up in a small town in west virginia and a close family with a strong work ethic. i joined mylan in 1992 as an entry level clerk performing basic administrative tasks in the basement of the company's manufacturing facility and worked through 15 different relation in the company until i reached my current position. when i started with mylan our sales were approximately $100 million with less than 500 employees and today our sales are in excess of $11 billion with more than 40,000 employees. in one in 13 u.s. prescriptions is filled with one of mylan's medications. i would like to highlight two facts about mylan. first, we aren't the kind of pharmaceutical companies that offers only a handful of companies, in fact, we are the exact opposite. over the last 55 years we have grown to offer more than 2,700 products, predominantly generics made at more than 50 manufacturing facilities. capable of producing up to 80
billion doses annually and we see the need to do more. this year alone we will invest approximately $1.2 billion in research and development and manufacturing or roughly 3 million a day to bring affordable access to many more complex products such as insulins and bio similars. second our business is predicated on high volumes of hundreds of products. in the u.s. alone we offer a portfolio of 635 products which translated last year to more than 21 billion doses available to patients at an average price to mylan of 25 cents. over the last decade mylan's medicines have reduced the u.s. healthcare cost by approximately $180 billion. this is an epipen. it may look simple, but it is actually quite complex. in the event of anaphylaxis, a severe allergic iraqis the more than 15 critical components in
this device must work every time and in seconds to deliver medicine to treat life-threatening symptoms quickly and without fail. many times self-administered by the person in the state of anaphylax anaphylaxis. before mylan acquired the company that owned epipen in 2007 fewer than 1 million of the 43 million people at risk had access to an epinephrine auto injector. at the same time it was estimated that anaphylaxis was causing 1500 deaths annually. we read stories of children dying at school because they did not have access to an epinephrine auto injector or due to a lack of education about the need. we saw this as an unacceptable and largely preventable health problem. we've worked diligently and invested to enhance epipen and make it more available. in fact, we have invested more than $1 billion in these efforts over the last few years and have succeeded on many fronts. we put an improved epipen device on the market in 2009, we now
reach 80% more patients and today approximately 85% of epipen patients pay less than $100 for two and a majority less than $50. we have made great strides in providing access to epipens in public places starting with schools. in the last four years alone mylan provided 700,000 free epipens to more than 66,000 schools across america with no strings attached. our pens were used hundreds of times including on many children who had no known allergies. i know there is considerable concern and skepticism about the pricing of epipens and i think many people incorrectly assume that we make $600 off of each pen. it's simply not true. recent epipen price increases have not yielded the revenue to mylan that many assume. in the complicated world of pharmaceutical pricing there is something known as the wholesale acquisition cost. since 2014 the wholesale
acquisition cost for two epipens increased from 401 to 608 or 51%. but the net revenue to mylan after rebates and fees what we actually received increased from $235 to $274, in other words, the annual increase to mylan for the last two years was approximately 8% per year or 16.6% cumulatively during this period. from that you must subtract our cost of goods which is $69, this leaves a balance of $205. after subtracting epipen-related costs our profit is $100 or approximately $50 per pen. in the last few weeks we have confronted the epipen issue head on. our program has four parts. we announced the first ever generic of the epipen product which will be priced at $300. this unprecedented move is the fastest and most direct way to reduce the price for all
patients. second, we are creating a direct ship option allowing patients to purchase the generic product directly from mylan. third, we increased our epipen savings card for the brand product from 100 to 300 and fourth we doubled our eligibility of patients receiving free pens from 48,600 to 97,200 for a family of four. with these changes our profit per pen will be substantially lower than it is now. i'm honored and proud to be the ceo of mylan and i have spent my entire career working to break down barriers to access and expand access to high quality medicine and lower healthcare cost. i wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full wholesale acquisition cost or more. we never intended this. we listened and focused on this issue and came up with an immediate and sustainable solution. going forward we will continue
our leadership in developing high quality medicine an expanding access. thank you. >> thank you. i will now recognize myself. miss bresch, you never anticipated it. you raised the price. what did you think was going to happen? >> thank you, chairman. we raised the price over eight years and we raised that price and i think what is incorrectly assumed is that $608 is what mylan receives. we receive $274 of that $608. >> here is what i don't understand. when you buy the generic version, what is the generic -- what's the difference in the generic version? is it just the name? >> it will be -- we will -- it will be the same product with epinephrine auto inject err on it, the same product. >> suddenly it's $608, now you will have a generic of the jen
eric and that's $300? >> yes. >> if they spend $300 they get two. >> yes. >> so your revenue will go up on the direct product because you say you only get $275 now you're going to get $300, correct? >> i think the direct ship will be -- we're trying to do that in case to catch everybody. we're hoping -- >> you are actually raising the price. >> no, sir. >> you're going to have more revenue. >> our net sales will absolutely go down. our net per pen will go down dramatically. >> how does your net per pen go down when you're collecting, i don't know if i believe you, but $274, under the direct program you will collect $300. >> from that then you take the cost of goods out, which is $69. >> which is the same on both. >> and then you take out the epipen -- >> wait a second. miss bresch, come on, you're very bright. if you're collecting $274 or $275 for two right now and you're going to do the generic
to save people money you're going to charge $300 your revenue goes up. how does it go down. >> that will be the wholesale acquisition cost is $300. we've cut the wholesale acquisition cost in half. >> the only thing you changed was the name. this is why we don't believe you. if the price goes from 608 to 300, your collection on that is actually higher and you're telling me that your net profit is going to go down? >> sir, what i'm saying is the wholesale acquisition cost -- and i know i've provided this, too, if you want to put it up, the wholesale acquisition cost is what is going to 300. what we will actually receive we're estimating at it 200, we believe it will be less than that. >> you said you're going to sell it direct. >> we offer that as an option. >> how much does that cost to a consumer? $300. >> we hope that everybody will
get it through the channels of all the programs. the patient reduces the cost for everybody across all the channels. >> wait. the patient reduces the cost. explain that to me. >> by introducing a generic which truly is unprecedented, i mean, we cut the price in half -- >> well, it's unprecedented to raise the price 500%. so you're raising it to lower it but your net revenue goes up. how can you say it goes down? >> what we receive is the 200. >> you said you're selling it direct for 300. >> we said that the wholesale acquisition price would be 300. >> you have got to help clarify this for us because this does not make sense. and i don't know how suddenly you offer that generic. let me go to dr. throckmorton for a second. what is the current fda backlog overall not just for the epinephrine, overall what is the current backlog on the drug approvals at the fda?
>> currently there are around 2,300 abbreviated new drug applications that we are reviewing. that is not backlog. the backlog, i believe you are referring to, would be the products that were in the cue prior to 2012, prior to the passage -- >> what's that number? >> the number of products that were in the queue in 2012 that remain unreviewed, less than 100. we have reviewed well over 90% of those products and provided feedback to the sponsors. >> how many epinephrine-oriented products are in the pipeline right now? >> i can't answer that question i'm afraid, congressman. >> no. wait. do you know that number? >> i do not know that number right now, sir. >> we're having a hearing about this. do you know that number? >> what i can -- >> here is the thing, they may tell you at the fda, hey, we don't ever talk about this. i don't care.
okay? congress doesn't care about that. i want to know how many epinephrine-oriented products are in the queue right now. >> i wish that i could answer that question. >> when can you give me that answer? >> i can get back whatever information i can to you as quickly as i can. >> are you going to get back the answer to the question i asked? >> i will be able to provide whatever information i can. >> are you going to answer the question that i asked? >> mr. chairman. >> yes. >> mr. lynch. >> would the gentlemen -- just on an inquiry, we've done this before with witnesses, given them five minutes to go out in the hallway and call the people at his office and get that answer for you. i think it's a pertinent question, you should have an answer. i yield back. >> how hard is it to get this answer? who knows that answer? >> it's simply a legal answer -- >> it's simply what? >> a legal answer. i'm not allowed to disclose commercial confidential information in this setting.
>> let me talk about it with staff here as this hearing progresses. it is a question we want to understand the answer to and i do think we should be able to get this. last question, miss bresch, this came up late in the process, it was a surprise to us, but can you explain or clarify from your own vantage point the role that your mother played in this process? i mean, we're reading these articles that seem sensational, i don't know what's true, what's not true. i'm giving you an open-ended opportunity to express your version of what is going on there. >> and i greatly appreciate that. the article is completely inaccurate. we -- mylan when we acquired this product and realized the complete lack of awareness and access to the product and the fact that public places, let's take schools, that if a child at a school or on a playground were
to go in and have a severe allergic reaction, go into anaphylaxis and if that child didn't have a prescription in their name at that school the school couldn't use it. so there were deaths in schools happening because there may have been epipens or other epinephrine auto injectors but they weren't allowed to be used in children, like i said, tragically died. we saw this as unacceptable. so there had only been a handful of states that had started to recognize that epinephrine auto injectors could be in a public place in the school's name, now in the child's name, therefore, the nurses and trained administrators could use it in the case of a tragic event. we then started helping and i applaud the federal legislatures as well as state legislatures who quickly recognized these tragic events and that they could be largely preventable and legislation began to get passed to allow schools to stock
epinephrine. we then launched our epipen for schools program which as i said we've given 700,000 free pens to over 66,000 schools with no strings attached and hope that one of the benefits of this would be that the other 65,000 schools will participate and receive free epipens. during this period of time you know the burden on schools from a policy perspective, training perspective. so we gave amounts to various groups, whether it was the national school board, national education for association, national school nurses that we could help and only helping to fund them train personnel and educate so that people could recognize an anaphylactic event and now how to use -- and now how to administer product. my mother has dedicated her life to education, has been a volunteer for years and rotated one year into the president of the national school board in 2012 and then rotated out. we have continued to work with
these organizations to continue to help train and educate. so while people may want to criticize mylan for giving free pens and having access in public places to epy pens i thought it was a cheap shot to bring my mother into this. >> i now recognize mr. cummings. >> thank you. >> thank you very much. miss bresch on august 29th the committee sent you a bipartisan request for documents. we included a simple request and i quote, we asked for the company's profits from the sales of epipen for each year since acquisition. end of quote. do you recall getting that? did you see that? >> yes, sir. >> ma'am? >> yes, sir. >> okay. your company has started to produce documents and we appreciate that. we now have information about your marketing expenses and a number of other costs.
but one thing that is absent, miss bresch, from your document production is your profits for each year. given how much you are now charging for epipen i think the american people have a right to know how much you and your fellow executives are making off of exorbitant prices you are charging for this drug. so let's start with last year. i see you've got all kinds of charts so maybe this is on one of those charts. how much profit did you make in 2015 from the sale of epipens? in 2015? >> so, sir, what i think we provided is what i did, as in my testimony, is that about $50 per pen is our profit and that's just direct epipen, it's not taking any kind of company allocation or anything else out of that other than just direct related epipen costs.
>> so do you have a number for me? how many did you sell? >> we sold -- i will give you roughly over the last 12 months number, roughly about 4 million packs of two. so 8 million pens but 4 million packs of two. >> according to the documents you had net revenues of $912 million in 2015 for epipens and that was after all rebates and discounts. is that right? >> yes, sir. what we recognize is the $274 per pen and so our revenue is calculated on that average of what mylan receives. >> so according to these documents you spent $97 million on marketing in 2015 alone and that is a huge amount and that's what the documents say. so that brings you to a number -- your number down to about $815 million, wouldn't you
agree? >> sir, i'm not sure what documents or what you're -- but what i can confirm -- >> you don't know how much you're making off of these pens? >> we spent about a billion dollars on epipens since '08. >> the next documents say you spent $255 million on cost of goods sold in 2015 so that brings the total to $560 million and that's pretty simple math. so, okay, so you have patient assistance programs and school-based programs for epipens, but the documents do not say how much you spent on them last year. so how much did you spend on those programs in 2015 for epipens? >> sir, i don't have the exact breakout, but, like i said, when i took the walk from 274 with cost of goods coming out at $69 which gets you to about the $205, and then down about $105
for epipen-related cost, which is what takes you to the $100 for two or the $50 per pen of profit. >> the fellow behind you is getting a chart. maybe you to. profits. >> you don't know how much i spent on programs last year? is that what you're saying? >> i just don't have it broken out. i said about $105 would be epipen related. all of those costs and everything else from -- that we spent on disease awareness. we have done a lot on an anaphylax anaphylaxis. over the last eight years, the ability to be able to educate not only is anaphylaxis
something that is life threatening, we know 25% to 30% of the time when someone goes into anaphylaxis they have never had a known allergy before, child or adult. >> that leads me to the next question. i know we have 43 million people with possible customer base. let me ask you this. let's talk about r&d. how much did mylan spend on research and develop projects, producted related to epipen in 2015? >> sir, actually we have spent over the years trying to do several things that failed and trying to -- >> can we talk about 2015? >> we hope within the next 12 months we have approved a new formulation that will spend the shelf life. >> that's not what i asked you. i said how much do you spend on
r&d in 2015. and i think the hearing is about epipens. and i've got to tell you, i talked about in my opening state about rope-a-doping. that's what i feel like. i feel like you're not giving me answers, ma'am i think it's in fairness to us, you knew what this hearing was about, you knew what your concerns were. i'm asking you questions that -- you're the ceo. >> yes, sir. >> that i would think you would know. it seems like this stuff would be at the top of your head. >> as a company, mylan spent $750,000 this year is what we're expected on r&d. it is not broken down on epipens. the overwhelming majority has been on access and awareness program. we have, like i said, we have
been developing over the years working on smaller devices due to patient feedback. we want to reform late it so it will have a longer shelf life. >> can we stop right in there? >> sure. >> put a shelf in there. how long is the shelf life? >> 18 months. >> how long are we trying to get it up to? i thought it was a year. i'm glad to hear it's 18 months. what are you projecting? >> 24 months is what we're hopeful for, and maybe longer. but a minute of 24 months. >> how soon will we know? what are researchers telling you? how soon will they have an answer? we are submitting to days to the fda. we have been on this for a
couple of years. it will be with 24 months. but you continue to, after you submit it to the fda, you're able to continue to work on stability. and there's an opportunity that it could go longer. but at a minimum -- >> i'm running out of time. i don't have about a minute left. would you agree you made hundreds of millions in profit in sales in 2015 in terms of epipen alone. >> i run an $11 billion company. yes, epipen is our largest product but by no means driving the entire performance of our company. >> you made hundreds of millions of profit in 2015 based on the sale of epipens? >> yes, sir. >> ms. bresch -- i'm almost finished. ms. bresch, here's what i want. i want you to produce a breakdown for this committee each year for the past 10 years
since 2007. i want you to include a detailed list of all your costs for each year, all your expenses for each year, and all your profits for each year for epipen. that's what we asked for nearly a month ago. and the the chairman is real big on documents. and i am too. it is very unfair to us when we ask you for documents and we don't get what we want. because what that means is that the hearing is over. as i said before, you go back, fly back to wherever your company is. and we are then -- we have at a loss to get the information we need. with that i will yield back. >> i recognize the gentleman from florida for five minutes. >> thank you, mr. chairman. there's no generic available for
competition to the epipen or is there? >> there is no generic product to any auto inject or auto formulation for epinephrine. there is an authorized generic, which as has been previously characterized is the brand name marketed two it the brand name on its label. >> it guess it would be public knowledge, anyone attempting to produce generic competition? >> i think it is public knowledge that there are companies that are looking at that. >> doctor, you would have to approve them. do you have any being considered for approval now? >> i can't comment on any specific applications. >> no. but do you have applications now? >> they would have to be approved -- >> how long have you had the applications? >> i'm sorry. i can't -- >> you can't tell us? >> i'm sorry.
i can't comment -- >> we need to know. one way to bring the price down is to have competition. wouldn't that be correct? >> i absolutely agree with that. >> can you let the committee know for the record how many applications you have. you don't have to tell us the name. and how long you have had them and how long you have been processing. >> i'm sorry. i can't provide that information. >> that's not acceptable to come here on this subject and not have that answer. so the pen is available. and i understand under the affordable care act there's some exceptions to that? >> i'm sorry? >> under the affordable scare act, is the epipen available? >> currentsly there are two products on the market. the first is the epipen. the other product is called a
tkraoepb that clip, which is an epinephrine auto injector that prescribers can write for and is available through pharmacies stkphrfplt how long would it take to get a generic approved and on the market? >> beginning october 1st, we have committed to 10-month review times for any new application. some products -- >> i want to know how long you've had any applications. >> i'm sorry. i can't provide that information. but i can tell you in addition to the 10-month clock that we have committed to beginning october 1st, some products that have -- are particularly high click health value, including so-called first generics are eligible for priority review. >> thank you. >> those would happen more quickly. >> ms. bresch, in a media interview, you said as a health insurance environment has evolved driven by the implementation of the affordable care act, patients and families
enrolled in high deductible health insurance plans who are uninsured or who pay cash at the pharmacy have faced higher costs for their medicine. is that correct? >> yes. >> and the chairman talked and the staff talked about the ingredients cost about a dollar. is that correct? >> no, sir. we pay $69 for the cost of goods for the epipen. >> $69. >> for two. >> for two. this -- is this your major profit setter for the company? >> so, sir, it represents -- >> is this your major profit setter? >> it's your largest product. >> is it your major profit center? it's your major profit center. >> it is our largest product, but we have -- >> one of the things that concerns us, some people can't
get this for their family, the kids. the prices are high. there isn't competition. and then it is also reported that the top five executives earned a collective $292 million from 2011 to 2015. is that correct? >> sir i think that -- >> is that correct? >> i don't -- >> okay. well, what's your salary? what was your salary last year? >> about $18 million. >> sounds like you're doing pretty well on this. >> how does your compensation compare to peers in the industry? >> it's in the middle. >> it's in the middle. >> yes, sir. >> were any of your payments or
executive compensation packages tied to the result of epipen sales? >> no, sir. epipen's performance is a factor in mylan's overall performance. but the board sets the compensation based on mylan's overall performance. >> my time is up but i will have other questions to submit to the witness. >> the gentleman's time has expired. i now recognize the gentle lady ms. norton. >> thank you, mr. chairman. i appreciate this hearing. could i ask you, ms. bresch, after an avalanche of criticism is, is perhaps the worst -- and that is really saying something -- of any pharmaceutical in recent memory, will you reverse the increase in price of epipens? >> so congresswoman, thank you. we have, by the introduction of a generic, which has never been
done before. an unprecedented event for a brand, to $300. >> that you did in response to the criticism. that's your response to the criticism you have gotten from the public long before you came to this hearing? but nothing about the brand name product. is that right? >> because the way we could make most immediate impact to the patient -- >> would be to reduce the price of the brand name product? >> but that would not be guaranteed to flow through to the patient. what we did is give immediate relief to the patients that fall into this. >> but that was your concern this may not go to the patient. so we will go immediately to -- >> yes. our concern was absolutely that everyone who needs an epipen has one. so putting a generic into the market would, we believe, be the most effective and efficient way
to make that happen. >> i asked staff, because there is some responses from you about this being only one of your products. how much -- how substantial was epipen? i was amazed by the answer. and i asked you to verify this. that mylan is 0.3% the product -- percent of the products you produce but 10% of the revenue. >> epipen is less than 10% -- a little less than 10% of our overall -- >> but only about 3/100 of the
products you produce? >> because we absolutely produce billions and billions of doses. 21 billion doses. >> yeah. but this turns out to be a minute amount of the products you produce. yet out of that comes 10% of the revenue. what bothers me when we try to -- what we ought to do is compare you with others. because you're certainly not the only one. the ranking member brought up the names of others who have become notorious. but even in that notorious grouping, mylan is 11th in revenue in the drug industry. can you confirm that? >> i'm not -- no. i'm not sure. >> that is our information. and unless you get back to us with different information, 11th in revenue in the entire drug industry, which is programs the
most criticized sector of the economy and 16th by market capitalization. and that mylan is paying its executives far more. for example, you have already testified that you earn $18 million. that's last year. i understand you earned $2.45 million in 2007. so you got a hefty increase. but from 2.5 less than 10 years ago to 18 million last year, that's the figure? >> i am blessed and fortunate to have not only financially but to have worked with this company for 25 years. and to -- >> could i ask you this, what have you done to earn 671% increase? what have you done to earn that kind of increase?
>> well, i believe mylan has done a tremendous amount -- >> i'm asking what you have done. i'm interested in your compensation. what have you done with with that kind of increase, 671% increase in less than 10 years. >> i would start with saving the u.s. over $180 billion. our products alone have saved $180 billion. >> i'm talking about this product. >> i'm talking about mylan. >> i'm talk building this product. what have you done. is your compensation based this product which turns out to be the epicenter on of your products -- of the many products you make. i'm trying to find out what you have done about this product that has earned such an increase. >> i would say having 700,000
free epipens across 66,000 schools across america could not more proud about that. and hope we can get them in the other 65,000. >> but then you will want another increase. >> the time has expired. i now recognize the gentleman from tennessee. >> thank you very much, mr. chairman. first, i want to associate myself with the opening remarks of the chairman and the ranking member. and according to nbc, since it was brought up, ms. bresch made 18 thorbgs 931.16. i suppose when you get to salary at the level we're talk building, it is easy to forget an extra 931,000. but the greed is astounding. it is is sickening, disgusting. almost any words that you can
think of. not only by ms. bresch but the other executives. and i am a very conservative pro business republican, but i am really sickened by what i have heard here today and by what i have read about this situation. i can tell you that in my nobody can earn or deserve $19 million a year. and lest anyone be under a misunderstanding that the free market or capitalism hasn't worked here, you don't have a free market. that's the problem. a true free market, you have ease of entry. you certainly don't have that in the drug industry. and you have plenty of competition in a true, free market. and you don't have that here. sit primarily the thought of the fda that -- i have read article after article of years after years. we let the fda become so big and
brattic, it is almost impossible for a small company to get a medical device or drug to market. the cost of getting a drug or medical device to market on average has become in most cases, over a billion dollars to get a drug to market. and because of that, the drug industry has ended up in the hands of a few big giants. and then i've read article after article that the drug companies and pharmaceutical companies hired most of the fda commissioners and top-level employees, just like the defense contractors have hired so many retired admirals and generals. and what they've done in the drew industry, they have come in and they have manipulated the market. ms. bresch justifies all of this saying that they only get $274
from the epipens. these pens were selling by this german company for $100 in 2007. we have had only had 30% inflation in those years and yet they have almost tripled the price this german company. i think congress with good intentions made the situation worst by giving incentives for the schools grant -- in grants to get these pens. and then i understand the new york state attorney general is getting ready to investigate mylan because they have required giving these first pens out for free as marketing devices but required them to buy them the next times they had to buy pens. but what does concern me, one
thing that really concerns me, according to september 1st on mdr, the fda, as of july, had 4,038 generic drug applications awaiting approval and the median time it takes to approve a generic is 47 months. that doesn't sound like a very expedited procedure to me. and then it says in march, generic version of epipen was rejected by the fda and it wouldn't be able to launch a generic at least until next year. another pharmaceutical company, amos. i'm not sure which i pronounced it correctly, reported a similar denial in june. so that's two companies that were turned down.
the fda needs to speed up its actions. and it needs to allow more competition. and it's not doing that now. and in the opinion of i think almost everybody here. and it's all being done on the backs of sick children and it's shameful. mr. chairman, thank you. >> thank you, gentlemen. >> thank you, mr. chairman. ms. bresch, since i have a limited amount of time i want to ask you a series of yes and no questions. and then i will give you an opportunity to respond in more detail if you would like at the end. first, epinephrine is a central life-saving drug, correct? >> yes. >> the formulation of 6th nephew rain, the active drug in the epipen has not changed since
2007, correct? >> pen has changed, the devised has changed -- >> but the formulation of the drug has not. >> right. >> do you admit you raised the price of epipen four times since acquiring it in 2007? >> yes, the acquisition costs. >> do you admit mylan spent millions and millions of dollars to expand the epipen market? >> yes and to expand access. >> and according to press reports september 17th, 2015, you stated at a conference, and i quote, we are continuing to open new markets, new access with public entity legislation that would allow restaurants and hotels and really anywhere you are congregating. there should be access to an epipen. did you make that statement?
>> yes, sir. >> in 2012, a settlement agreement was reached with tava farm suit qaa industry preventing it from putting a generic on the market until 2015 or earlier under certain circumstances. is that correct? is that correct? >> yes, sir. >> do you admit by delaying the entry of a generic drug into the marketplace, mylan has had less competition? do you knit that you had less competition by that delay? not you all delaying but having the delay? >> but we have had competition to epipen every year. >> was the -- the "new york times" reported that although mylan, and i quote, was once taking two 10% price increases a year.
it has made two 15% increases annually starting in 2014 when the generic competition seemed imminent. do you admit that in anticipation of generic competition, mylan raised the price more sharply than it had in the past? >> not due to generic competition. we did increase the wholesale acquisition cost. as i have stated, we get 274 out of the 608. so we received an average of 8%. >> in raising the price, do you admit they were intended to generate even more significant revenues before generics entered the market? was that the intent of the raising the price that you all receive additional revenue? >> we certainly received additional revenue.
but on 274, just not the 608. >> have you ever witnessed an individual having an epileptic seizure? i grew up in 1960s and '70s and i had a friend who i witnessed on a couple of occasions these seizures. have you ever witnessed a seize senator. >> due to anaphylaxis? >> yes. >> no, sir. >> well, it is not a pretty sight. look, modern medicine has advanced in a way that's beneficial to patients. but to have companies like yours take advantage of this situation, take advantage of these people who are really in need of this medication, i think
it speaks to something that is -- that we are better than that. and i would hope that corporate america, that the pharmaceutical industry is better than that. i mean, look, in the last few seconds, tell me what -- you know, how did we get to this point, did we have a culture like this in corporate america that wants to stick it to consumers? >> sir, all i can speak to is our culture. mylan has, for over 50 years, spent and invested in being able to produce low cost pharmaceuticals and provide access. over 21 billion doses. we have had saved the country over $180 billion. our premise is to provide access. what we worked on with epipen is to be able to give 700,000 free pen toss schools with no strings
attached. >> but you put it out of reach of the general consumer. >> the gentleman's time has expired. the question was answered. i recognize myself for five minutes of questioning. recent news articles, ms. bresch, have documented a lob lobbying effort on behalf of mylan to add epipen to the list of the u.s. services task force. preventive medical services proventilnesss before they cause symptoms or problems, as i understand it. currently treatments receiving a grade of a or b by the task force are required to be offered to consumers with no out-of-pocket costs. supporters of adding the epipen to the list of preventive medical services argue that this measure will help get access to epipen without cost sharing.
ms. bresch, will adding the epipen to the preventive medical services list, will it do anything to lower the actual price of the device, the overall reason for our hearing today? >> so the preventive drug list, as you've mentioned, would make sure everyone has access. but what we have now done with the generic drug and dropping the price to 300 we believe provides that similar access but believe that obviously the importance of epinephrine auto injectors should be part of the preventive drug list. >> so you are still pushing to have it on that list? >> i absolutely think it should have -- yes. >> do you believe that spending lobbying resources to add the epipen preventive list is a realistic solution to stem rising drug prices? >> but, sir, that's why what we
did is so unprecedented. we dropped the price in half by introducing the generic. >> but you still want it on that list? >> just to ensure that -- just showing the importance. >> why not reduce the price instead of those lobbying resources. >> it is about getting epinephrine in schools and eventually -- just like a defibrillator. when you need when seconds count and they should be where you are. >> we don't disagree with that at all. we appreciate that the product can't be there and can't be useful. but this list, i think we need to plumb the depths of that. the list also -- won't this ship the full cost of epipens to government payers such as medicaid, medicare, health insurers, employers, eventually
lead to go an overall list of premiums in other co-pays and consumers? >> no, sir. by, one, putting the generic like we have 300, over 85% of our patients pay minimal out-of-pocket costs. by reducing it by half, reduces it even further. this is not all about cost shifting. it is making sure everyone has access. >> it takes the pressure off bad publicity for a cost factor to get it paid for by medicaid, medicare, et cetera. let me shift over to mr. that moren. the delay, the bureaucratic maze. some drug companies are taking advantage of your agency's failure to approve more generic drugs. i think we have seen that. we're questioning that today.
what can we do to expedite approvals to make we prevent drastic price spikes? we heard testimony in our last go round that was a lot of bureaucracy? >> i want to take issue lightly with that of where we are as an acknowledge. there was a time when our resources were not able to keep up with the applications we were receiving for true generic drug products. not authorized generic but true drug products under the abbreviated new drug applications. there was a time in 2012 where we didn't have the backlog. we had over 4,400 applications that needed to be reviewed. in 2012, with congress's help, we got additional resources allowing us to hire new individuals, put in place new processes. the result of that had been over 2,200 approvals or tentative
approvals since 2012. so we have in fact, made progress in reaching chemicals regarding true generic products. >> what about the markets. are you doing anything to identify markets that are at risk of becoming monopolized? >> sure. we agree with everything that's been said about the power of competition and us taking the challenge on. us making new products. in particular when you talk about auto injectors for epinephrine, the public health value is even higher. we need to put particular attention. we have done several things specifically about difficult to develop products like the epinephrine auto injector. i mentioned a couple of them earlier. the guidances that we have put out, talking about how to put
these products on the market efficiently, quickly, how we're going to review the data, the kinds of information you need. in addition, we meet with any company that has a product with this public health value, we offer to meet with them individually. we offer to respond to their questions in writing. >> i appreciate that. my time has expired. but i would make a statement that if there are companies that are having difficulty, i certainly think that members in this panel would love to hear directly from them and come directly to you to ask those questions. because we want to deal with this. we want to have the competition. we want to see the price reduced. we don't want hearings like this on a regular basis. my time has expired. now to the gentleman from massachusetts. >> thank you, mr. chairman. ms. bresch, i want to go back to the profit you have given us
today. last year the price was about $460 per a two-pack. is that right? >> sir -- >> the documents you gave us are totally deficient in trying to figure out how much you're charging people and how much it cost you, just so you know. i know we have outstanding document requests for your company. i hope you can comply with those as soon as possible to help the committee with this work. so let's -- just go off your chart there. $401 one year. that was 2014? $530 in in 2015. and a whopping $608 this year so
far. so how much money were you making per epipen back in 2014 then when you were charging $400? >> so, sir -- >> please, not another chart. >> i'm just saying that the $235 -- >> i'm not talk building that. i'm talking about the top price. >> we -- >> talk building the overall price. >> we received $235. >> look, that's not what i'm asking you. can you just answer the question. when you were charging $400 back in 2014, how much were you making? >> equivalent to the $50 -- approximately $50 -- >> okay. $50. >> $40. >> $40? >> yeah. >> $40 back then. >> i believe so. >> 2015 it went up to $500.
how much were you making that year? >> we received $219. our profit was around $38. >> $38. now it's up to $50 this year? >> approximately. >> if you're only making $50 this year, you must have been losing money the previous years. you have gone up $200 in the overall price, top price and still only making $50. i can't understand that. the numbers don't work. based on the documents you have given us. >> so, sir, the 608 is the wholesale acquisition cost. >> we have done that dance. we have done that dance. i understand that. >> and then it's approximately $50 a profit off the 274. >> mr. throckmorton -- let ask you, do you do business with the v.a.? >> yes, we do. >> what's the v.a. paying?
>> i'm not sure of the cost -- >> they have the ability to negotiate their own drug prices? >> yes, sir. >> it's a hell of a lot less, i bet. >> yes. >> maybe that's what we ought to do for everybody else. negotiate directly with the pharmaceutical companies. that's what i think should happen here. i think it was not your intention but i think it might have helped congress get around an issue by showing the blatant disregard you have and disrespect you have for people who desperately need this medication. and you talk about expanding the abilities for people to have the epipen. people in my district can't do it at $608. and a lot of those people don't have discounts. they're regular middle-class people. they don't have that discount. and medicare part d, their increase -- i know the access
went up by 164% since you bought the company from merck. but the cost increase are up 1,151% based on on the study here that i have from julie et kobanski and patricia newman. i want to enter this for the record. this is disgraceful what's going on here. but i think in a way, like i say, you have done us a little bit of a favor here by just showing you what's wrong with this system, what's wrong with our health care system. i think it's disgusting. i'll yield back. >> thank you, mr. chairman. ms. bresch, i wanted to get inside the mind of a large drug company ceo for a minute.
when did you sit down and decide after 2008 you acquired the epipen. when did you decide to use this model price increase. and how did you come to that decision? >> it was first recognizing the fact that there's a severe shockingly low understanding of anna tpa lack sis. >> we have about over a billion dollars over this eight years to provide access. >> how much have you made over eight years? >> it is absolutely our largest product. but -- >> i just say how much have you made? you said you invested a billion dollars. you know how much invested. how much did you make? >> i don't have the cumulative number. >> but you know what you spent. do you think you're charging too much? do you think $600 is too much? or were you going to keep rising
the price? >> sir, which is why we took the unprecedented action of putting the generic in at $300. >> we'll get to that. but did you plan on increasing the price in 2017? >> no, sir, we did not. >> but you did have a plan the raise it every year for five or six years? >> and if you look at what we received -- >> no. i just asked you a question. did you have a plan to raise the price every year for six years? >> we had raised the price. and i think managing to what we received, that 274 out of the 608 is what we were managing. >> you are proud of your company. you got $100 for the drug i had one of your reps come by my office back in 2009 or 2010 to show me how to use it. so i know it cost a little bit of money. generally when a drug goings to generic, doesn't the drug go
down? >> which is why we dropped it to $300? >> after you jacked it up for $600. you fixed the price on the drug. when did you know you were going to release the price on generic? >> we released it several weeks ago. >> but when did you know as a company? it takes months, maybe years. >> no. we're putting an authorized generic in the market, which is equivalent to -- >> we are supposed to feel good because you have a judge overcharging six times what it's worth and dropping it to $300. >> sir, it was $600. >> do you believe it was too much at $600. >> we thought it was a low prior and we now lowered it by half. >> if you thought it was fair, why not leave it where it's at? >> we wanted to address the
patients that are paying the wholesale acquisition cost. the system wasn't intended for people to pay the wholesale acquisition cost. that is happening at an alarmingly rising rate. we put it the generic to side step that. >> you are doing everyone a favor by charging three times what you acquired it for. i'm not buying your argument. do you have a con science about this. >> giving 700,000 free epipens to 66,000 schools and wanting to get into all the public schools across america. >> well, if it cost 20 bucks they could afford to buy their own. instead, you chose to jack the prices up and make everyone want to feel good about you by saying how much you do. you took a very inexpensive drug and profited
handsomely. when you take drugs that are life-saving drugs and people don't have a choice. they can't go to a different department store to have that tie. you decided to charge $600 instead of cutting off her arm. now you're dropping to to 300 to make us feel good. and that's 10 times what it should cost. you can sit there with with a clear con science today? is that your testimony? >> congressman, we want everyone who needs an epipen so everyone can have one? >> lower the price then. are you going to lower the
price? >> trying to address every facet of patient to make sure they can have access to epipensis what they will remain focused on. >> now recognize the gentleman from virginia for five minutes. >> ms. bresch, welcome. i was listen to go your earlier testimony, your formal testimony. and i was just struck with what humanitarians you people at mylan really are. and if you listen to your testimony, you would never know what the abhor is about. do you understand the nature of the abhor? >> i do, is sir. and i truly believe the story got ahead of the facts. because i think people -- because of the complexity around the farm assume cal system, i think that us being able to now really put on the record what we're making, comes to mylan
and. >> you'll forgive me. i only have five minutes. so i have to manage my time like you have to manage yours. i don't want to cut you off, but i want to get to some questions. so let me get this straight in terms of coniology and sequencing. you took over the previous manufacturer in 2007. is that correct? >> correct. >> the price of epipen had been fairly stable up to that point. is that correct? >> yes. >> so since 2007, you've raised the price 15 times, if i understood it correctly? >> yes, sir. >> so what happened between 2007 and 2016 different than the previous manufacturer and producer? did product costs sky rocket for you? >> costs of goods increased for sure. >> well, how much?
>> almost 100%. >> what was the comparable price of epipen in that 100% cost increase? >> i'm saying over the last eight years. >> right. and i'm saying -- you went from what to what in eight years in what you charged maximum price? i took your point that not everybody pays that. we have a medical system with all different kinds of pricing. what was the comparable increasing? you were absorbing 100% cost to you to produce. what was the comparable cost in theory to consumers, maximum cost increase in that time period that you charged by raising costs 15 times? >> sir, today that's $274 that we receive for the epipen. >> well, i was asking for a percentage increase. if you're going to contend that
production costs went up 100%, all right. what is the comparable price increase for consumers during that time period? your own testimony you acknowledged you raised the price 15 times. >> i believe it is almost 300%. >> presumably that's profit? >> after the cost of goods come out and you take out all other costs. >> i don't care what your profit is. america is built on profits. profits are an incentive. what i care about is what you charge consumers who have no choice. if i understand it, you've got a stranglehold on the market. you control 94% of this market. is that correct? >> sir, we have a large market share. we don't control. >> i'll withdraw the word control, ms. bresch, if it
offends you you have 94% of the market. >> yes. >> consumers are experiencing it a little differently. and so because you have such a stranglehold on the market, you can do what you want in terms of pricing? >> sir, we have had many competitors in and out of this marketplace. >> they don't equal 6% of the market, ms. bresch. that doesn't even pass the giggle test of what you are asserting. you have had a monopoly and it is at the expense of people who need it. this is live-saving in some cases. people who risk anaphylactic shock don't have a choice. they have to use it. and i'm wondering what your sense of social responsibility is to those people. i mean, how do you balance -- i'm looking.
i could go through for you, statements you made and the company has made in the annual reports to investors. and it sure is a different set of statements than we have heard today. i didn't hear the humanism, philanthropic call. i heard has delivered double digit growth to date. that's because of your price. >> but, sir, it's also because we were reaching double the amount of patients and protecting and having the ability to be prepared with an epipen. so we absolutely expanded access and reached to patients who are at risk as well as putting them in public places like our schools program. >> during the call to investors, one question asked to you was, what other prospects of future price increases for epipens. this is an investor meeting. and your answer, and i quote,
you should foresee that just continuing as we continue to maximize the epipen franchise. what did that mean? if it wasn't reassuring inve investors we were going to maximize our profit. i don't think profit is a bad thing. but i do think it's a bad thing when somebody exploits it against consumers who live on its price or don't. >> and, sir, that's why we have taken every step to ensure everyone who needs an epipen has one. all of our programs, whether access program, the card, or schools program, so our 700,000 free epipens throughout the 66,000 public schools and we want to reach the 65,000 public schools. >> my time has run out. there is a dr. jeckyll and mr. hide quality of your testimony. there is one message in the public.
quite another for investors. i yield back. >> now recognize the gentleman from south carolina. >> thank you, mr. chairman. as you know, i'm not a physician, which is why i'm consulting in one. but i am trying to understand, ms. bresch, if you can help me walk through the different chains of delivery from name brand to authorized generic, from manufacturer to the patient. what is the difference in the chain of delivery? >> do you mean in the product or how it is distributed? >> distributed. >> so the supply chain from generic is different than the supply chain for a brand. >> authorized generic. >> authorized generic and generic would be the same channel. >> okay. >> so the distribution channels do differ primarily given the
fact that generics are for the retail pharmacy. so there's the supply chain from a pharmacy manager or the formularies differ from the brand to the generic. >> that leads me to another question. i'm sure there's a really obvious answer. but in my background, i don't know what it would be. why don't pharmacies just deal with the manufacturer? if a doctor has to write a prescription and the pharmacist knows what the prescription is for, why is there a middle person in the delivery of drugs? >> so, sir, for many -- on the generics, for many we do deal directly with pharmacies, whether they're large chains or inspects. >> i guess that's my point. if you could do it for generics and authorized generics, why not for name brands too? >> because the -- most of
america is -- falls under a formulary, payers, and pharmacy manages those formularies for insurers or employers. they manage what products can be -- it is tiered. they decide what products can be on a tier 2 or tier 3. so whether it's preferred or not preferred. they serve as an administrator for most employers. >> the drug middleman serves as an administrator? >> as far as deciding what products are on -- that they will reimburse for or what rate they will reimburse for them. >> lets me ask you this. is it theoretically possible your profit margin could increase with an authorized generic as opposed to the name brand drug? >> no, sir. it will be considerably less.
>> walk me through how that would be. you're cutting out the middleman but yet you're making less money. how? >> there's still fees and rebates and discounts on the generic side, on the generic channel. they're just not as significant. so we're charging a wholesale acquisition price of 300. we estimated our net, what would come to mylan would be 200. after you take costs of goods out of that and epipen-related cost, it will certainly be less than the $50 that we talked about today around the profit per pen that mylan receives on the brand. >> i think you answered this question but sit important. i want to be on the record. walk me through the costs all the way down to what mylan gets for treating it as a name brand versus treating it as an
authorized generic. >> sure. so this is the math of -- you can see the wholesale acquisition, mylan revenue of 274 minus cost of goods, minus the direct cost, which is the $100 or $50 per pen. and what we've said for the generic, wholesale agriculture seugz is 300, mylan received 200, less cost of goods, less epipen-related costs. so it will be substantially less than the $50 of profit per pen that we receive on the brand. >> thank you, mr. chair. >> thank you. just one question. >> following up on what he said. it seems like you would be taking a loss.
when you go to generic. and you said you have certain costs, it seemed like you would be taking a loss on the generic. am i missing something? >> not a loss, sir. i said we would be making less than -- substantially less than the $50 per pen that we are making today. >> i thank the gentleman from south carolina. i recognize the gentle woman from illinois, ms. duckworth. >> thank you, mr. chairman. i want to highlight the stories of two families from my district. the bronk family, lease is sa and bob have an 8-year-old son brian diagnosed with severe food allergies before he turned 1. lisa carried an epipen for five years. and one day brian ate something and began foaming at the mouth and vomiting and nightmare came true. when he came home from the hospital he said, mom, i don't want to die. even at five years old, brian knew how serious his body's reaction was.
he knew his throat was closing. on this occasion, an epipen saved his life. my 14e8 hanson from shaupl burg, illinois is deeply concerned about the skyrocketing process. her daughter and husband both have life threatening peanut allergies. they have to have two sets at camp, grabbed parents's house and mom's purse. that's why michelle took the time to write to me and urge me to do everything in my power to ensure everyone, even those less fortunate, can protect their children with the same level of care. the bronk and hanson families are lucky. they have good insurance. like lisa shared with me, we don't know if they will always be in that position. one day they may not be able to afford the epipen, whose price keeps going higher and ire. and i agree. even a single life lost due to lack of affordability in this
drug is one too many. i'm going to ask you short one-word answer. don't try to filibuster and run up my time. so i need you to answer yes or no. earlier you said epipen has given occupant 700,000 epipens -- mylan has given out 700,000 epipens to schools across the nation. is that correct? >> yes. we have given free epipens. >> mylan discounts through the epipen for schools program. is that correct? >> yes. . they can purchase additional pens if they want. >> okay. so this is particularly important in illinois. states like illinois that have laws that require schools to stock epinephrine auto injectors. this is a program in schools that your own mother was inmental in getting states to adopt at her capacity a president of the national association of state boards of education. so we can better august, august 12th to may of 2016,
approximately how many schools signed certification forms purchasing discounted epipens at a price of $112.10 per decided purchase additional -- besid besides -- >> how many schools have done this? >> 5%. about 45,000 epipens. >> 45,000 schools. >> no. no. epipens purchased. >> how many schools? >> i'm not sure -- >> answer my question. you don't know -- you just quoted a number of how many schools you had given them to and how many schools you had not given to. you can't tell me how many schools have bought epipens from you on this program you're so proud of? >> it's a small number. it's very small. the 66,000 schools are who we've given free epipens to. >> i'm also not as concerned about your profit making. i believe in the free market.
when i'm concerned about is your monopolistic practices. there's confusion in public reporting. could you simply confirm, yes or no, whether schools have purchased discounted epipens had to make any representation and warrants to mylan that they would adhere to certain conditions in order to access the discount price that you give them? >> schools did not have to purchase any epipens. >> no. the schools that are trying to get the discounted price from you, did they have to certify or make any representations or warrants to mylan they would adhere to certain conditions in order to get the price. >> for people who wanted to buy it at the discounted rate, yes. but that had nothing -- the free epipens had no -- >> i'm not talking about the free epipen. i'm holding he -- mr. chairman i'd like this entered into the record. >> without objection, so ordered. >> thank you, mr. chairman. it's a certification form where mylan has actually said that the
school hereby certify that it will not in the next 12 months purchase any products that are competitive to epipen autoinjectors. you actually put into practice forcing schools and you're so concerned about these kids that you are limiting the schools' ability to buy pens from someone else. so you're saying we'll sell it to you for $100. if you want it for the $100 price you need to sign this and say you can't buy this from anybody else. don't answer, i'm not asking your question. that's what you've done here. >> i disagree with that. they did not have to buy our pens. >> if they wanted to get this price. >> if they wanted a heavily discounted price, yes, they bought epipens. >> heavily discounted price is $112.10 which is where it was before you jacked up the price to $600. so it's not a discounted price. it's discounted because you raised the price and you say you want it at the old price before
we jacked it up for profits, you need to sign this and say you will not buy this from anybody else. i'm not asking you a question. this is what you have done. your own document says it. >> they don't have to buy them and everyone -- >> you don't have to buy them but your own mother is lobbying to make sure they're in all the schools. this article says that many members of the board of nasbe didn't even know there was a family connection between you and your -- mylan and your mom. through you. she was out there trying to passing out your guides from mylan as she was out there talking to school boards, she was pushing for these epipens to be put into school districts. then they can't buy it for a longer -- >> congressman, that is completely inaccurate. >> then you tell schools you want it at the old price, sorry you can't buy it at the old price. because we -- unless you promise not fwoto buy from anyone else. that's an unfair monopoly.
i yield back. >> i recognize the gentleman from texas. >> thank you very much. i understand why you make $18 million trying to figure out the complexities. drug pricing as me flummoxed. i won't name $18 million in a 100 years serving in congress. let me ask you, you talk about the whole sale acquisition cost of $608. who pays $608 for an epipen? i mean, what is the whole sale -- is that like the manufacturer's suggested retail price? >> so it certainly was never intended for the whole sale acquisition cost, the system we certainly didn't make the system. >> okay. yeah. i'm not coming after your company. all right. i'm very tempted to. because i think y'all have behaved badly and have invited government regulation. i'm a free market person. i'm very much for free market. but this whole drug pricing
system that we have right now makes no sense to me and a free market can't operate in a system where people like me who are consumers don't understand it. so i'm going to lay aside my concern about what your company is doing and why. i think it's wrong. but that's not where i want to get. i want to get to the pricing. you said $600 -- i'm going to call it manufacturer's suggested retail price. all right. so in a free market you've got a manufacturer whole saler retailer and consumer. in the drug market you've got the manufacturer, you've got the insurance company, you've got the pharmacy, you've got the doctor, you've got the benefits manager and there are probably some more players in there, all who need to take a little bit of money out. we created a very complex system. so basically, you said manufactur manufacturer's suggested retail price of $608. the only sucker who is going to
pay that is somebody who doesn't have insurance. i don't know. you come up with all the rebate plans you have to go to the website and print something out. you have a discount plan for schools. it's incredibly complicated it makes airline pricing look reasonable. i want to fix this. because it's not just your product that is the problem. medical prices are sky rocketing. doctors complain to me they're not making any money. insurance premiums are going up, deductibles are going up. how can we fix this where you can make a reasonable profit and the drug can be available at a price that people understand. and the doctors know and i can talk to my doctor about. i mean, my doctor, i got this new pill you can take you take it once a day instead of twice day. instead of being a $10 co-pay it was $120 copay. god knows what my insurance was paying. i'm going to take two pills to
save that kind of money. in most cases people and doctors even don't have the information to do that. how do we simplify this and get the cost of these down where you can make a profit, the doctor can make some money, the pharmacy can make some money. but people can afford healthcare? how do we fix this? >> well, i wish there was a simple answer. the system has been around for decades. and it certainly has not kept pace with the evolving healthcare that our nation faces, the crisis to your point, that healthcare faces. i believe that first, there needs to be more transparency in the system. and certainly welcome the opportunity to sit down in a more holistic way and have the conversation. the whole supply chain has to be involved in that. >> let me ask the doctor, with the fda, it seems like there may be something you guys can do about this.
i see -- i had a doctor i was talking to just monday. he said, yeah i see the ad for the new drug. do you realize it cost over $128,000 a year to do that. if you're not a doctor -- maybe even some doctors don't know it. should we be requiring drug companies to disclose the cost of medication in their advertising? >> that would not be a question for me to answer, congressman, but a very good question. the fda is not allowed to consider cost when we look at drug approvals. >> in your industry, would it be supportive of that. >> i absolutely believe if we want consumers to be able to shop and get them ingaugengagede system they have to know what something cost. >> i'm almost out of time. ia i have one more question. i applaud your company about educating folk oz about the need for the ability of epipens.
i don't understand why your marketing costs have to jack up the price that much. if you sell 100 epipens and make what was your profit, $50 on each pen, and you sell 200 epipens at the same price, you're going to make more money -- the same amount of money. i didn't say that correctly. but what i'm saying is as your volume goes up your profit goes up and you don't have to jack the price up. that ought to pay for the advertising. i'm out of time. i'll let you answer if you want. >> thank you. >> did you want to answer? >> i just would say that it's constantly about trying to reach as many patients as we possibly can. so we continue to invest in being able to reach and provide that access. >> you recognize ms. plesicate
for five minutes. >> thank you, mr. chairman, good afternoon, it's my understanding when we talk about mylan and the eligibility threshold in your patient assistance program. what has that nothing come to at this point, what is the amount? >> it is i believe, 97 -- right around 97,6$97,600 for a family four. >> many of us here, including yourself come from communities where i don't really know that many of the families that make $97,000 as a family of four. you know, where in the virgin islands the average amount is $50,000 for family of four. in other places you're familiar with that would be the case as well. how do they -- how do you as a